Employer Pays For Shoddy Workplace Investigation
August 2016
Article by:
James D. Kondopulos
Previously printed in the LexisNexis Labour Notes Newsletter.
It was impossible for Mr. Lau to deal with the allegations against him. It was impossible for him to properly defend himself, because from the outset the bank believed that the client told the truth and Mr. Lau did not. RBC … failed to meet their implied obligations of good faith and fair dealing.
Lau v. Royal Bank of Canada, 2015 BCSC 1639 per Loo J.
Overview
The B.C. Supreme Court’s decision in Lau v. Royal Bank of Canada, 2015 BCSC 1639 provides a reminder of the crucial importance of conducting a fair, objective and thorough workplace investigation, especially where dishonesty or fraud is alleged.
An investigative stitch in time could well have saved the employer in this case nine months’ worth of damages for failure to provide termination notice, $30,000 in aggravated damages and costs.
Facts
On January 27, 2012, Marco Lau met with a Cantonese-speaking client in his office. The client agreed to modify the way her bank holdings would be invested. Contrary to bank policy, Lau processed the transaction as new money instead of retained money.
Several days later, the client filed a complaint about the transaction. RBC’s corporate investigation services team (“CIS”) was called in.
Lau immediately acknowledged that he had tracked the sale improperly. He, however, claimed that he had followed the instructions of a colleague, Anson Tse, who Lau suggested had also been at the meeting with the client. Lau apologized for the tracking problem.
It was later uncovered that several other members of the branch had also been improperly tracking their sales data. Many of them said that Tse had coached them in this respect.
The issue of who had been in attendance at the initial client meeting became complicated. The client said she had met only with Lau. Tse initially said he was at the meeting but later changed his story to say that he had not been there. Lau was steadfast in maintaining that Tse was at the meeting. There was also video surveillance footage which supposedly showed Tse did not at any point enter Lau’s office.
On the basis of the CIS investigation, the bank discharged Lau from employment for what it said was just cause. It also submitted a report to the BC Securities Commission pursuant to its statutory obligation. In the report, the bank stated:
The termination was a result of [Lau’s] falsification of bank records and failing to tell the truth when questioned regarding an alleged joint session with a client. In particular, he claimed existing money as new to bolster his sales, and maintained that he participated in a joint session with a client despite evidence to the contrary.
Lau had been with his employer for five years at the time of termination of his employment. Following his dismissal, he tried unsuccessfully to obtain employment with several different banks.
Decision
B.C. Supreme Court Justice Linda Loo concluded that there was not just cause for termination of Lau’s employment. She took into consideration factors including the plaintiff’s immediate acknowledgment of wrongdoing and “unblemished” employment record.
With respect to the bank’s investigation into who had attended the meeting, Madam Justice Loo identified a laundry list of flaws:
- The video surveillance footage which was said to be “conclusive” was not at all conclusive. The surveillance footage from the day in question was in fact not available at trial.
- The bank produced no copy of the recorded interview between CIS and Lau. The one CIS interviewer who was called as a witness at trial had little independent recollection of the interview.
- The complaint of the client was made orally in Cantonese to a translator. The translator relayed the information to a representative of the bank. CIS accepted the representative’s report as accurate in its totality and did not investigate the client complaint any further. The client did not testify.
- Lau was never given an opportunity to view the video or respond to it . This was in spite of asking to see it. He was never told that Tse admitted to not being at the meeting and, in addition, never had the client’s statement put to him.
For these reasons, Madam Justice Loo found Lau had been wrongfully dismissed from employment. She found that he had been dismissed in circumstances which “made it virtually impossible for him to find employment” because “[m]ost, if not all, employers want an employee who tells the truth”.
Interestingly, the judge also awarded Lau an additional $30,000 in aggravated damages. Despite the fact that there was no medical evidence before the Court to support a claim for aggravated damages, the judge was of the view that she did “not need medical evidence to prove that a false accusation of failing to tell the truth which is published can lead to mental distress”.
Conclusion
This decision serves as a sobering reminder that a shoddy workplace investigation can lead not only to a finding of wrongful dismissal but also to an award of aggravated damages (and perhaps punitive damages) as well as costs.
Here are some helpful pointers when conducting a workplace investigation:
- Inform the employee under investigation of all allegations against him or her. This is a matter of fairness. It gives the employee the opportunity to hear the allegations and tell his or her side of the story.
- Gather and weigh all material evidence and be sure to interview all relevant witnesses, even if it means meeting with multiple individuals.
- Keep detailed, accurate records of investigative interviews. In appropriate circumstances, consider asking the witness being interviewed to review and sign any statement that he or she has provided.
- Make the necessary credibility assessments, remaining mindful of the possibility of fabrication, motive and the inherent dangers associated with hearsay evidence.
- Perhaps most importantly, use a skilled workplace investigator from inside your organization or even outside it and, where necessary or appropriate, consider retaining reputable legal counsel to conduct the investigation.
August 2016
Previously printed in the LexisNexis Labour Notes Newsletter.
It was impossible for Mr. Lau to deal with the allegations against him. It was impossible for him to properly defend himself, because from the outset the bank believed that the client told the truth and Mr. Lau did not. RBC … failed to meet their implied obligations of good faith and fair dealing.
Lau v. Royal Bank of Canada, 2015 BCSC 1639 per Loo J.
Overview
The B.C. Supreme Court’s decision in Lau v. Royal Bank of Canada, 2015 BCSC 1639 provides a reminder of the crucial importance of conducting a fair, objective and thorough workplace investigation, especially where dishonesty or fraud is alleged.
An investigative stitch in time could well have saved the employer in this case nine months’ worth of damages for failure to provide termination notice, $30,000 in aggravated damages and costs.
Facts
On January 27, 2012, Marco Lau met with a Cantonese-speaking client in his office. The client agreed to modify the way her bank holdings would be invested. Contrary to bank policy, Lau processed the transaction as new money instead of retained money.
Several days later, the client filed a complaint about the transaction. RBC’s corporate investigation services team (“CIS”) was called in.
Lau immediately acknowledged that he had tracked the sale improperly. He, however, claimed that he had followed the instructions of a colleague, Anson Tse, who Lau suggested had also been at the meeting with the client. Lau apologized for the tracking problem.
It was later uncovered that several other members of the branch had also been improperly tracking their sales data. Many of them said that Tse had coached them in this respect.
The issue of who had been in attendance at the initial client meeting became complicated. The client said she had met only with Lau. Tse initially said he was at the meeting but later changed his story to say that he had not been there. Lau was steadfast in maintaining that Tse was at the meeting. There was also video surveillance footage which supposedly showed Tse did not at any point enter Lau’s office.
On the basis of the CIS investigation, the bank discharged Lau from employment for what it said was just cause. It also submitted a report to the BC Securities Commission pursuant to its statutory obligation. In the report, the bank stated:
The termination was a result of [Lau’s] falsification of bank records and failing to tell the truth when questioned regarding an alleged joint session with a client. In particular, he claimed existing money as new to bolster his sales, and maintained that he participated in a joint session with a client despite evidence to the contrary.
Lau had been with his employer for five years at the time of termination of his employment. Following his dismissal, he tried unsuccessfully to obtain employment with several different banks.
Decision
B.C. Supreme Court Justice Linda Loo concluded that there was not just cause for termination of Lau’s employment. She took into consideration factors including the plaintiff’s immediate acknowledgment of wrongdoing and “unblemished” employment record.
With respect to the bank’s investigation into who had attended the meeting, Madam Justice Loo identified a laundry list of flaws:
- The video surveillance footage which was said to be “conclusive” was not at all conclusive. The surveillance footage from the day in question was in fact not available at trial.
- The bank produced no copy of the recorded interview between CIS and Lau. The one CIS interviewer who was called as a witness at trial had little independent recollection of the interview.
- The complaint of the client was made orally in Cantonese to a translator. The translator relayed the information to a representative of the bank. CIS accepted the representative’s report as accurate in its totality and did not investigate the client complaint any further. The client did not testify.
- Lau was never given an opportunity to view the video or respond to it . This was in spite of asking to see it. He was never told that Tse admitted to not being at the meeting and, in addition, never had the client’s statement put to him.
For these reasons, Madam Justice Loo found Lau had been wrongfully dismissed from employment. She found that he had been dismissed in circumstances which “made it virtually impossible for him to find employment” because “[m]ost, if not all, employers want an employee who tells the truth”.
Interestingly, the judge also awarded Lau an additional $30,000 in aggravated damages. Despite the fact that there was no medical evidence before the Court to support a claim for aggravated damages, the judge was of the view that she did “not need medical evidence to prove that a false accusation of failing to tell the truth which is published can lead to mental distress”.
Conclusion
This decision serves as a sobering reminder that a shoddy workplace investigation can lead not only to a finding of wrongful dismissal but also to an award of aggravated damages (and perhaps punitive damages) as well as costs.
Here are some helpful pointers when conducting a workplace investigation:
- Inform the employee under investigation of all allegations against him or her. This is a matter of fairness. It gives the employee the opportunity to hear the allegations and tell his or her side of the story.
- Gather and weigh all material evidence and be sure to interview all relevant witnesses, even if it means meeting with multiple individuals.
- Keep detailed, accurate records of investigative interviews. In appropriate circumstances, consider asking the witness being interviewed to review and sign any statement that he or she has provided.
- Make the necessary credibility assessments, remaining mindful of the possibility of fabrication, motive and the inherent dangers associated with hearsay evidence.
- Perhaps most importantly, use a skilled workplace investigator from inside your organization or even outside it and, where necessary or appropriate, consider retaining reputable legal counsel to conduct the investigation.